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Showing 481 to 500 of 1510 Records
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2015 (1) TMI 1032
Attempt to smuggle Red Sander Wooden Logs - Misdeclaration of goods - penalty under Section 114(i) - Held that:- Tribunal has rendered a categoric finding that there is no finding of a positive role of the first respondent in the attempt to smuggle out red sander wooden logs. Even in the order of the Original Authority, it is held that the custom house agent has not discharged his duty in the normal course of his service. As rightly observed by the Tribunal, for failure to discharge functions as a Custom House Agent, penalties are provided in the Customs House Agents Licensing Regulations. Therefore, imposition of penalty under Section 114(i) of the Customs Act is unwarranted. We, therefore, find no reason to differ with the finding of the Tribunal - Decided against Revenue.
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2015 (1) TMI 1031
100% EOU - Valuation of goods - Enhancement in value of machinery - Extended period of limitation - Held that:- Appellant unit during its existence as a 100% EOU had imported free of customs duty certain spare parts for machinery and there is no dispute that these spare parts were used for replacement of the old and worn out machinery parts during January 2001 to May 2001 period. Even though these spare parts have been capitalized, in our view once the spare parts have been used for replacement of the old and worn out machinery parts, the same become part of the machinery and they loose their separate identity. The use of these spare parts for replacing the old and worn out parts of the machinery would not increase the value of the machinery. At the time of debonding, the duty is payable on the value of the duty free raw materials and the depreciated value of the imported or indigenously procured capital goods and for this purpose, the value of the capital goods cannot be enhanced by the value of the spare parts used from time to time, even if the same have been capitalized. It is also seen that at the time of debonding, the Jurisdictional Inspector, Central Excise, after checking their records and stock, had determined the appellant's duty liability and had communicated the same under his letter dated 09/04/04 and at that time also he had checked the account of receipt and consumption of the imported as well as indigenously procured spare parts. In view of this, the appellant cannot be accused of suppressing the relevant information from the Department and, therefore, no justification for invoking the extended period under proviso to Section 28 (1) of the Customs Act, 1962 and, as such, the show cause notice dated 03/10/07 is time barred. - Decided in favour of assesse.
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2015 (1) TMI 1030
Import of designs and drawings for manufacturing of ship - department was of the view that the drawings and designs cannot be classified under Chapter 49 inasmuch as there is a CD accompanying the drawings and designs and hence, the goods should be assessed under CETH 85238090 as recorded media. - Confiscation of goods - Imposition of redemption fine - Section 125 of the Customs Act, 1962 - Held that:- From the records available and the evidence led by the appellant, it is clear that they have placed orders for import of "hard copy" of the drawings and designs of ships. They have never placed any order for import of any CD. They have also produced a letter from foreign supplier saying that the CD was sent by mistake and they should be allowed for re-export. Section 23 of the Customs Act, provides for relinquishment of the title to the imported goods by the importer before an order for clearance for home consumption is made by the Customs authority. Therefore, this request of the appellant should have been considered by the adjudicating authority. Nevertheless, inasmuch as the goods are lying with the department on confiscation, the interests of Revenue are completely secured. The question of ordering any pre-deposit under Section 129E of the Customs Act, 1962 would arise only when the goods are not available and the Revenue is at risk as held by the Hon'ble Apex Court in the case of Bhavya Apparels Pvt. Ltd. [2007 (9) TMI 274 - SUPREME COURT OF INDIA]. Thus, the appellant has made out a strong case for waiver of pre-deposit and accordingly, we grant unconditional waiver from pre-deposit of the dues adjudged against the appellant and stay recovery thereof during the pendency of the appeal - Stay granted.
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2015 (1) TMI 1029
Bail Application - Held that:- case is pending since last 10 (ten) years and, out of nine cited witnesses, evidence of only four witnesses have been completed so far. Besides this, the accused is in jail since last more than five years. Smti Nargis, the learned counsel for the accused further submitted that in another case under NDPS Act the High Court has very recently granted bail to the same accused and in other case under IPC also the accused is on regular bail. Besides this one more case was registered under NDPS Act in the State of West Bengal and in the said case the accused/petitioner has been acquitted. - accused is in custody since last more than five years and there is no possibility of immediate conclusion of the trial. Hence, I hold that if the accused is directed to be detained in custody it would amount to abuse of the power of Court besides violation of fundamental right of speedy trial of the accused. Hence, the bail prayer is accepted solely on the ground of long period of custody of the accused and long period of pendency of the case and not on any other ground.
Trial procedure of NDPS cases instituted by way of complainants, otherwise than on police reports - What procedure to be adopted by the learned Sessions Courts for conducting trial of cases registered on the basis of complaints lodged by the Customs and Revenue Departments under NDPS Act i.e., cases instituted otherwise than on police report - held that:- Section 36 of the NDPS Act gives clear indication that Special Courts are being constituted for speedy trial of narcotic cases and to pursue this object certain special procedure for filing of the complaint directly in the Sessions Courts/Special Courts and also with regard to search, seizure and disposal of narcotics etc. have been provided in the Act. Section 35 of the Act also vests the powers of Officer-in-Charge of a police station upon the officers of DRI and Customs etc. and Section 53A provides that statements made and signed by a person before the empowered officers shall be relevant for the purpose of proving the truth of the facts under certain circumstances. Even otherwise there are scores of judgments from the Hon’ble Supreme Court and the High Courts that the statements of the accused persons recorded under Section 67 of the Act are insulated from the interdict of Sections 25 and 26 of the Evidence Act. I have already noted earlier that the law also provides taking cognizance of the complaints directly by the Sessions courts/Special Courts despite there being restrictions under Section 193 of the CrPC. In this way, all the provisions of the Act propagate the theory of speedy trial of the narcotic offences under the Act. Hence, I hold that the hurdles in between should also be removed by this Court.
NDPS Act contains special provisions with regard to search, seizure, arrest, granting bail, recording the statements of witnesses and accused persons, disposal of the seized narcotics and substances etc. However, the Act is totally silent as to what procedure should be adopted for trial of the cases. Under Section 36A(1)(a) it has been provided that all offences under the Act, which are punishable with imprisonment for a term of more than 3 years shall be triable only by the special Courts. In this way the offences which attract punishment of less than 3 years are triable by the Courts of Judicial Magistrates. Section 36D provides mechanism for transitional period. It provides that until a special Court is constituted under Section 36 all the offences under the NDPS Act can be tried by a Court of Sessions. Section 36C makes it clear that all the provisions of the CrPC shall apply to the proceedings before a special Court and for the said purpose the special Court shall be deemed to be a Court of sessions. All these provisions lead to the only conclusion that the offences under the NDPS Act, which are punishable for more than 3 years, are to be tired by the Court of Sessions/Special Courts and the procedure provided for sessions trial cases under Chapter-XVIII of the Code should be followed. For removing any confusion it is further provided that the requirements and the pre-conditions of the trial provided under Sections 207 and 209 shall be followed by the Sessions Courts/Special Courts since the complaints/offence reports are directly filed in the Court of Sessions. These directions are given in exercise of powers conferred upon me u/ss 482 and 483 of the Criminal Procedure Code, 1973 and under Article 227 of the Constitution of India.
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2015 (1) TMI 1028
Confiscation of goods - Import of oil - Mis declaration of goods - Held that:- assessee had produced statement of bank account and also income tax return where taxable income of only ₹ 1,95,000/- has been declared. It, thus, prima facie, appears that the matter regarding genuineness of the transactions and also the existence of the respondents is required to be examined before imposing condition for the release of the goods. - Matter remanded back - Decided in favour of Revenue.
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2015 (1) TMI 1027
Import of all the components of a battery operated tricycle, except its battery, packed together - Whether this can be called as motor vehicle - Held that:- this kind of importation of an entire vehicle, except the battery, broken down into its parts, was not contemplated by the legislature - The cardinal test of a motor vehicle, appears to be that it should be capable of mechanical propulsion from power derived from a source, external or internal, in the state in which it is. - It is true that when an entire motor vehicle or a substantial part thereof is imported, which includes the description of motor vehicles in the explanatory notes cited by Mr. Bharadwaj, only accessories like wheels, tyres, batteries are to be joined to it. - This kind of importation, by the petitioner in my opinion, does not fit into this description. What is imported cannot be called a vehicle, by any principle of purposive interpretation. Therefore, the insistence of the Customs authorities on the certificates, mentioned in their query, was not proper. It is not part of their job to ask for the certificates because the vehicle has not been manufactured as yet. After the parts are assembled and the vehicle assumes its status, then it is upto some other authority to deal with it in accordance with law.
The imported items may not be “parts” wholly and are not a vehicle, according to my interpretation. Then will they not be assessed to duty? While making an assessment of duty it should be the duty of every officer to make a purposive interpretation of the Act, the Rules, the subject headings and the tariff thereunder. If it is found on taking into account the entirety of the parts in one package that it is closer to a vehicle, the assessment should be made accordingly. On the other hand, if it is found that they are closer to the description “parts” and if assembled, may constitute a vehicle, assessment should be made treating them as parts. Therefore, the assessment part is left to the Customs officials.
Writ application is disposed of with the direction that the respondent authorities will be free to make the assessment under Section 17 of the Customs Act without insisting on the certificates mentioned in their query - Petition disposed of.
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2015 (1) TMI 1026
Contravention of Sections 9(1)(b) and 9(1)(d) of FERA - penalty under Section 50 of the FERA - Held that:- Retraction of the confessional statement containing admission of wrong-doings by the appellant came after more than ten years, at the stage of personal hearing only, and not before that. Had the appellant been subjected to threat, coercion or pressure – as alleged by him rather belatedly, he would have retracted his confessional statement soon after making the same, once the alleged threat, coercion or pressure ceased to influence the action of the appellant. It is not his case that the said factors continued to influence him for 10 long years. Moreover, the appellant failed to disclose as to how he was pressurized, coerced, or tortured, and by whom, when he made the earlier confessional statement. The confessional statement was also duly corroborated by the aforesaid independent evidence viz. the list of persons to whom the monies had to be distributed, received by fax from Ubaidullah of Dubai.
Thus, the plea of the appellant, founded upon his so-called highly belatedly retraction of his confessional statement, has to be rejected. Pertinently, though the appellant sought to produce bank transaction statements to show that he had been receiving monies from Ubaidullah of Dubai after the incident in question, and his consistent case is that he had been receiving monies from Ubaidullah of Dubai even earlier, he did not produce any material evidence to show that monies were earlier being received through a legal banking channel. - The appellant has been let off rather lightly considering that he had admitted to having received ₹ 13 Lakhs in all, i.e. ₹ 5 Lakhs on 16.11.1994 and ₹ 8 Lakhs in all, on two earlier occasions. The maximum fine, in these circumstances, could have been to the tune of ₹ 65 Lakhs. However, the appellant has been let off with a nominal fine of ₹ 1.5 Lakhs. - Decided against assessee.
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2015 (1) TMI 1025
Disallowance of obsolescence charges in respect of certain nonmoving imported spare parts - Tribunal allowed deduction - Held that:- So far as question is concerned, the Hon'ble Supreme Court in case of Commissioner of Income-tax v. Alfa Laval (India) Ltd., [2007 (11) TMI 281 - SUPREME Court] has held that (i) there was no undervaluation of stock, where the assessee had valued its obsolete stock at 10 per cent and had sold it in the next year at less than that value and (ii) the amount written back in the profit and loss account by way of adjustment on a recomputation of the depreciation on the basis of a circular of the Company Law Board could not be reduced from the profit eligible under section 32AB, and (iii) interest from customers and sales tax set off received by the assessee, being profits of the business under the head "Profits and gains of business or profession" could not be excluded while calculating the deduction under section 80HHC. An appeal was preferred to the Supreme Court by the Department against the said decision. The said appeal was dismissed by the Supreme Court leaving the question of law open. - Decided in favour of assessee.
Deduction in respect of guest house disallowed - ITAT allowed the deduction - Held that:- While the two expressions, 'premises and buildings' and 'residential accommodation including any accommodation in the nature of guest house' can be similarly interpreted, a distinction has been sought to be introduced for the purposes of Section 37 by specifying the nature of building to be a guest house. In our view, the intention of the Legislature appears to be clear and unambiguous and was intended to exclude the expenses towards rents, repairs and also maintenance of premises/accommodation used for the purposes of a guest house of the nature indicated in Subsection (4) of Section 37. When the language of a statue is clear and unambiguous, the courts are to interpret the same in its literal sense and not to give it a meaning which would cause violence to the provisions of the statute. If the Legislature had intended that deduction would be allowable in respect of all types of buildings/accommodations used for the purposes of business or profession, then it would not have felt the need to amend the provisions of Section 37 so as to make a definite distinction with regard to buildings used as guest houses as defined in Sub-section (5) of Section 37 and the provisions of Sections 31 and 32 would have been sufficient for the said purpose. - Decided against assessee.
Telephone equipment installed in the factory, mobile equipments etc. - whether eligible for investment allowance u/s. 32A of the Act? - Held that:- "The word "installed" occurring in section 32A(1) would not necessarily mean that it should be fixed in a position, but the word is also used in the sense of "induct" or "introduce" or "placing an apparatus in position for service or use" as held by the Supreme Court in CIT v. Mir Mohammad Ali [1964 (4) TMI 12 - SUPREME Court]. The word "installed" would mean to place in position for service or use or to set up for service or use. The books would be installed when they would be placed for use in the premises in question" . Hence , we answer issue No.3 in favour of the assessee
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2015 (1) TMI 1024
Expenditure incurred for the expansion of existing business - Revenue v/s capital expenditure - Held that:- The amount which has never materialized, i.e. the expenses incurred towards such project is rightly treated as revenue expense and not as capital expenditure. - Decided in favour of the assessee.
Exclusion of 90% of net interest for calculating the deduction under section 80HHC - Held that:- The question involved in the present appeal is governed by the decision of the Supreme Court in Distributors (Baroda) P. Ltd. v. Union of India and others [1985 (7) TMI 1 - SUPREME Court] and the deduction given under Section 80(c) is required to be upheld. Therefore, the tribunal has rightly directed exclusion of 90% of net interest for calculating the deduction under section 80HHC of the Income Tax Act, 1961. Income Tax Appellate Tribunal was right in law in allowing the expenditure of ₹ 32.05 lacs incurred on feasibility study of PET product. We also hold that the Income Tax Appellate Tribunal was right in law in directing the exclusion of 90% of net interest for calculating the deduction under section 80HHC of the Income Tax Act, 1961. - Decided in favour of the assessee.
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2015 (1) TMI 1023
MAT computation - deferred revenue expenditure towards (advertisement, publicity, distribution and sales promotion) debited to the P & L account and carried to the Balance Sheet and approved by the assessee's Board as per the Companies Act when maintaining regular books of accounts could be modified and other years expenditure can be claimed during the current assessment year itself when computing Book profits u/s.115JB of the Act upheld by Tribunal - Tribunal reversing the finding of the appellate authority that before allowing deduction under Sec. 80HHC of the Income Tax Act, the unabsorbed loss and depreciation should be carried forward and set off and only in respect of the balance deductions should be allowed, - Held that:- As is clear from Section 115JA of the Act, it deals with the 'deemed income'. It is not the actual income earned by the assessee. The object behind it is to prevent the assessee from adjusting the accounts or manipulating the accounts so as to avoid payment of tax on the ground that they have not earned any profit at all.
When once the assessee has incurred an expenditure and it is deducted in terms of Part-II of Schedule-VI of the Companies Act and the profit is arrived at, merely because in the printed P & L account for the purpose of showing to the shareholders that a profit is made by the Company, the entire expenditure is not deducted and a portion of it is shown as a deferred expenditure, the assessee cannot be denied the benefit of actual expenditure incurred. The assessee is not showing the actual expenditure incurred to avoid payment of tax. On the contrary when the actual expenditure is given deduction to, the profit margin gets reduced. It is by showing it to the P & L account, a portion of it as a deferred payment, artificially the profit has gone up. The object of Section 115JA being to avoid adjustment of account, manipulation of figures to avoid payment of tax. When the assessee has actually incurred expenditure and the tax liability is less when compared with the net profit arrived at after giving deduction to the actual expenditure, the tax payable is on that net profit and not on the fancy figure shown in the P & L account for the purpose of showing profit to the shareholders. In other words, to find out what is net profit one has to look into the books of accounts maintained by the company and the profit and loss account prepared on the basis of such book of accounts. What is shown in the printed balance sheet is for the benefit of the shareholders as it will not reflect the true state of affairs and that cannot be made the basis for levying tax under the Act. This is precisely what the Tribunal has held. Neither under the Companies Act nor under the Income Tax Act, this concept of deferred expenditure is recognized. That is a pathology used by the chartered accountants to show to the shareholders that the company has made profit though it has not earned profits. It is nothing but a window dressing and the authority should not be mislead or guided by this balance sheet which is prepared to satisfy the shareholders. It is the P & L account prepared on the basis of the books of accounts as contemplated in Part-II of Schedule VI which should form and assist to find out what is the profit earned and on that profit, tax is levied. - Decided in favour of assessee.
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2015 (1) TMI 1022
GP addition - unaccounted production in absence of clear cut justification from assessee for impact of change in factors resulting in increased fuel consumption both in value and volume terms - Tribunal deleted addition - Held that:- Tribunal being ultimate fact finding authority, has found that in absence of any material to show that the transaction entered into books of account was bogus or that any entries in the books of account were not supported by vouchers, the books of account maintained by the Assessee could not have been discarded and in case of doubt, it was required for the A.O. to verify genuineness of expenditure. The Tribunal has upset the fact finding of the lower authority.
In our view, the question sought to be canvassed can further be considered only if ultimate finding of fact by the Tribunal is upset after re-appreciation of evidence on record. It is hardly required to be stated that the finding of fact would be beyond the scope of judicial scrutiny in the present appeal where, the judicial scrutiny would be limited to substantial question of law. Whether books of account could be discarded or not, considering the facts and circumstances, essentially, it is a question of fact and not the question of law. - Decided against revenue.
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2015 (1) TMI 1021
Reopening of assessment - ITAT held reopening as illegal as beyond four years and the assessee has fully disclosed true and complete facts, necessary for assessment - ITAT came to conclusion that the Appellate Commissioner has not committed any error in allowing the assessee to produce new material in violation of Rule 46A - Held that:- We are in complete agreement with the view taken by the Tribunal. The Tribunal has given cogent and convincing reasons in arriving at the conclusion. We do not find any reason to interfere with the order of the Tribunal. Hence, the present appeals are dismissed. Accordingly, we hold that the Tribunal was right in law in coming to the conclusion that reopening of assessment for Assessment Year 1989-90 under Section 147 read with Section 148 of the Income Tax Act is illegal. The Tribunal was also right in coming to the conclusion that the Appellate Commissioner has not committed any error in allowing the assessee to produce new material on record. - Decided in favour of assessee.
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2015 (1) TMI 1020
Claim of deduction of liability - assessee failed to debit the liability in its books of accounts - Held that:- Unable to appreciate the suggestion that if an assessee under some misapprehension or mistake fails to make an entry in the books of account and although, under the law, a deduction must be allowed by the Income-tax Officer, the assessee will lose the right of claiming or will be debarred from being allowed that deduction. Whether the assessee is entitled to a particular deduction or not will depend on the provision of law relating thereto and not on the view which the assessee might take of his rights nor can the existence or absence of entries in the books of account be decisive or conclusive in the matter. The Tribunal was right in confirming the order of the Commissioner of Income-tax (Appeals) and in directing the Assessing Officer to allow the deduction of the liability. - Decided in favour of assessee.
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2015 (1) TMI 1019
DTAA - “Cyprus” ought not to have been declared as notified jurisdictional area by the notification dated 1.11.2013 in view of international treaty between Government of India and Government of Cyprus - Held that:- While exercising the writ jurisdiction under Article 226 of the Constitution of India, this Court ordinarily should not proceed to look into as to whether informations sought by the Indian Authorities were ever declined by the Government of Cyprus or Government of Cyprus is ready and willing to supply the informations sought by the Indian Authorities. Moreover, there seems to be no valid reason to disbelieve the satisfaction so recorded by the Indian Authorities. Consequently, petitions fail for relief No. (a).
In the present writ petitions, petitioner is also challenging revised certificate dated 12.12.2014 passed by the Income Tax Authorities. Undisputedly, Income Tax Authorities are competent under Section 154 of the Income Tax Act to revise earlier orders passed, even suo moto, if any illegality or irregularity is observed therein, at the subsequent stage. Undisputedly, all orders passed under Section 154 of the Act can be assailed in statutory appeals.Since, alternative remedy of statutory appeal is available to the petitioner to challenge the revised certificate dated 12.12.2014, therefore, not inclined to invoke my writ jurisdiction under Article 226 of the Constitution of India. W.P. dismissed.
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2015 (1) TMI 1018
Non deduction of tax at source on IUC payments made to non resident telecom operators and capacity transfer payments made to Belgacom - according to the assessee the order is barred by limitation, because the proceedings u/s 201 of the Act for assessment year 2007-08 were initiated and completed beyond a reasonable period of time - Held that:- When we examine the facts, then it would reveal that the Assessing Officer had issued first notice on 6th of June, 2011. The financial year 2007-08 would end on 31.03.2008. Even if we take the limitation of 4 years then this would go up to 31.03.2012. Assessing Officer had called for details of payments with regard to IUC payments on 15.05.2012 and thereafter issued notices on 10.12.2012. Thus, it cannot be said that notice was not issued within a reasonable period. The learned CIT (A) has observed that for scrutinizing the return, notice u/s 143(2) was to be issued within six months from the end of financial year in which the return is furnished and for re-opening of an assessment u/s 147; time limit has been provided from 4 to 6 years from the end of the relevant assessment year as provided u/s 149. Thus the action of the Assessing Officer is within a reasonable time. Therefore, we do not see any reason to interfere in the findings of the CIT (A) on this issue. - Decided against assessee.
Order of the Assessing Officer not held to be bad in law and void ab initio by CIT(A) - Held that:- Payments made (IUC and CTA) by the assessee to NTOs and Belgacom falls within the ambit of section 5 (2) of the Income Tax Act. Alternatively, he held that these are in the shape of royalties and it can also be construed as payment of fee for technical services. The learned CIT (A) has not decided the issue with regard to the nature of the payment being FTS because in the opinion of the CIT (A) once the payment contained the nature of the royalty payment, then there is no need to look into; whether the payments in the shape of FTS is involved in these payments or not. To our mind basically no specific finding is required on this issue at our end because, this is an argument, which indicates the alternative position of the law on a particular payment made by the assessee to the non resident. We will deal with the arguments of the learned representative while taking the issue; whether these payments can be termed as royalty payments or FTS. At this stage, no specific finding is required on this ground of appeal. - Decided against assessee.
Payments “accrued or arise” in India - taxability need to be determined u/s 5(2)(b) OR u/s 9(1) - Held that:- The inference drawn by the learned Revenue authorities that income is deemed to be accrued or arisen in India or accrued or arisen or received in India merely on the basis that such payments was made from India is incorrect. However, to the extent that if income is deemed to accrue, arisen or receive in India u/s 9 is concerned, if (subject to our finding on these aspects), then it will become part of total income u/s 5(2). Thus, there is no inherent contradiction between both the sections, the only thing is that Revenue authorities in the present case have erred in drawing an inference that when payment is made from India, it would be construed that income has been received, accrued or arisen in India. To this extent, we differ with the conclusions drawn by the learned Revenue authorities below, but it is an academic issue in the present case, because ultimately, taxability would be dependent upon our finding given u/s 9(1)(vi) and 9(1)(vii) i.e. whether the payments involve royalty or FTS. Decided partly for statistical purposes.
Characterization of IUC payment - whether the IUC payments made by the appellant to the NTOs qualify as royalty as defined in Explanation 2 to section 9(1)(vi) and whether the appellant was under an obligation to deduct tax at source thereon u/s 185 - India-UK DTAA - Held that:- Consideration paid by the assessee as IUC charges for alleged inter connect service falls within the ambit of process royalty and element of income was involved. Therefore, the assessee was bound to deduct the TDS on such payment. [see case of Verizone Singapore Pte Ltd - 2013 (11) TMI 1058 - MADRAS HIGH COURT] - Decided against assessee.
Liability to deduct tds - Held that:- Once it is found that the amount is not exempt under Art. III of the DTAA and there is no specific provision for assessment of such a receipt in DTAA, the applications of treaty comes to an end. Thereafter, one has to refer to the provisions of the Income-tax Act to assess the receipt.We are of the view that enquiry contemplated u/s.195(1) does not contemplate a wider scope equivalent to the one available in the regular assessment proceedings. In the present case, payee has no concern about the withholding of taxes that is the reason they have not opted for applying the DTAA to these payments at the time when payments were made by the assessee. Thus the assessee failed to demonstrate with sufficient material as to how it harboured a belief that taxes are not to be deducted at source while making the payments. In the enquiry thereafter the Assessing Officer has demonstrated with a reasonable degree that payments involved an element of income u/s.9(1)(vi) Explanations (2), (5) and (6). - Decided against assessee.
The next contention raised by the assessee is that liability to deduct tax has been put upon it by virtue of retrospective amendment, thus it was impossible for the assessee to deduct TDS at the time of payments is not acceptable as observed that by insertion of Explanation (5) and (6) scope of expression 'Royalty' has not been expanded. These Explanations do not create a different charging position upon the consideration paid by an assessee for use or right to use of any process. These are clarificatory in nature. The position to deduct TDS at the time when assessee made the payments was categorical and it was not persuaded to perform which is impossible to perform. - Decided against assessee.
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2015 (1) TMI 1017
Depreciation on goodwill - “bundle of business and commercial rights" - slump sale - Held that:- We agree with the submissions of the ld. Counsel of the assessee that the Hon’ble Delhi High Court’s decision in the case of Areva T & D India Ltd. vs. DCIT (2012 (4) TMI 79 - DELHI HIGH COURT) supports the case of the assessee wherein held that the specified intangible assets acquired under slump sale agreement were in the nature of 'business or commercial rights of similar nature' specified in section 32(l)(ii) and were accordingly eligible for depreciation under that section. Thus we are in agreement with the submissions of the ld. Counsel of the assessee that the goodwill that has been recognized in this case represents various assets in the nature of goodwill. - Decided in favour of assessee.
Depreciation denied - vehicles which were admittedly used for the purpose of business and were owned by the appellant but however, these were not registered in the name of the appellant - Held that:- It is thus clear that the technicality of an asset being registered in the name of the asset can not come in the way of an assessee’s eligibility for depreciation as long as such an asset is de facto owned by the assessee and is used for the purposes of the business. In the present case, in the light of the business transfer agreement, there is no doubt that the asset was owned by the assessee. It is not even in dispute that the asset was used for the purposes of the business, nor has that been the case of the Assessing Officer. The conditions for eligibility to claim depreciation are thus satisfied on the facts of the present case. In view of these discussions, as also bearing in mind entirety of the case, we uphold the grievance of the assessee and direct the Assessing Officer to delete the impugned disallowance of ₹ 64,821. - Decided in favour of assessee.
Disallowance of 50% of legal and professional fees - CIT(A) deleted addition - Held that:- In the present case, there is no dispute about the facts of service being rendered and there is no benchmark set for as to what would constitute a fair market value of the services in question. Unless there is a clear finding that the market value of the services taken from the sister-concern is less than the price at which the services are obtained, there cannot be an occasion to apply the disabling provisions of s. 40A(2). This exercise, therefore, necessitates a finding about the fair market value of such services. There is no such finding in the present case. In these circumstances as also bearing in mind entirety of the case, we are of the considered view that the disallowance made by the A.O. was devoid of legally sustainable basis. The learned CIT(A) was thus quite justified in deleting the same. - Decided against revenue.
Disallowance of the foreign travelling expenses - CIT(A) delted the addition - Held that:- no reason to interfere in the matter, since, as rightly noted by the learned CIT(A), the impugned disallowance is indeed devoid of any legally sustainable basis. No disallowances can be made simply on the basis of assumptions, surmises and conjectures. We have noted that no specific requisitions were made by the A.O. for further information in respect of details of foreign travel expenses and yet the A.O. has disallowed the expenses for want of full and complete details. As regards the A.O.’s observation of earlier expenditure incurred on exploring new market, we are in complete agreement with the learned CIT(A) that there is no basis whatsoever to come to this conclusion and it is purely an inference drawn on the basis of assumption.- Decided against revenue.
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2015 (1) TMI 1016
Long term capital gains assessment arising out of property sold - assessee has claimed exemption from chargeability to capital gain by contending that as the entire sale consideration was paid to the bank towards discharge of the debt of a company and firm wherein they are directors/ partners it has to be allowed as an expenditure while computing capital gain - Held that:- As can be seen from the facts and materials on record, the sale consideration received by the assessee was deposited into his personal bank account. It is also a fact that the assessee has made FDs out of the sale consideration and also earned interest which were offered to tax in the return of income filed by the assessee. It is also a fact on record that the sale of property took place much earlier to the sanction of OTS by the bank which advanced loan to M/s Hoe Leather Garments Pvt. Ltd. and M/s. Hansa Overseas Enterprises wherein assessee along with his brother are directors/partners. Therefore, as can be seen the sale consideration received on sale of the property was not directly paid to the concerned bank towards discharge of the debt as per OTS as claimed by the assessee. Moreover, it is not in dispute that the amount claimed to have been paid by the company/firm towards OTS originated from the unsecured loan claimed to have been availed through the personal accounts of the directors/partners. In these circumstances, assessee's claim that the bank has appropriated the sale consideration towards discharge of debt as per the OTS, in our view, is not acceptable. There is no direct nexus between the receipt of the sale consideration and payment made to the bank towards discharge of the debt. Moreover, it is a fact on record that the unsecured loan of the amount claimed to have been received from the directors has been disbelieved by the Department while completing assessment in case of M/s Hoe Leather Garments Pvt. Ltd. and additions were made u/s. 68 of the Act which also stand confirmed. Therefore, in a sense the claim of unsecured loans from the directors of the amount utilised towards discharge of debt has also not been accepted by the Department. In these circumstances, assessee's claim that since the entire sale consideration was utilised towards discharge of the debt, the same cannot be chargeable to capital gain, in our view, is not acceptable.
Even, assuming for arguments sake that the property in question was mortgaged as a security towards the debt availed by the company and the firm, the same cannot exempt the assessee from chargeability of capital gain on the sale of the asset. Decided against assessee.
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2015 (1) TMI 1015
Assumption of jurisdiction u/s 153A by AO - addition to income - CIT(A) deleted additions - Held that:- The Department has failed to bring any material on record to show that additions made were on the basis of any incriminating material. On the contrary, it is evident on record, in the search assessment, AO has revisited the issues which were subject matter of original assessments. Even, assuming that AO has proceeded u/s 153C, we need to observe, neither the assessment order nor any other material placed before us could indicate that any valuable article, thing, document etc., belonging to assessee was found as a result of search to enable the AO to initiate proceeding even u/s 153C of the Act. Thus, the conditions of neither section 153A nor section 153C are satisfied. That being the case, proceeding could not have been initiated against the assessee either u/s 153A or u/s 153C of the Act. In the aforesaid view of the matter, we do not find any reason to interfere with the order of ld. CIT(A) in holding that AO could not have made the additions. - Decided in fvaour of assessee.
Disallowance of general expenses of ₹ 34,000 - power of CIT(A) to set aside the issue to AOHeld that:- d. CIT(A) in principle, having held that expenditure incurred towards gift items is allowable as business expenditure should have deleted the addition. In the aforesaid facts and circumstances, we consider it appropriate to delete the addition of ₹ 34,000. - Decided in favour of assessee.
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2015 (1) TMI 1014
Validity of reopening of assessment - Held that:- Since the approval was obtained by the Assessing Officer from the ld. Commissioner of Income-tax instead of Joint Commissioner of Income-tax or the Addl. Commissioner of Income-tax under section 151(2) of the Act, notice under section 148 of the Act is invalid and void ab initio. We accordingly quash the assessment after holding that the reopening was not done in accordance with the provisions of the Act. - Decided in favour of assessee.
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2015 (1) TMI 1013
Invoking the jurisdiction under section 153C r.w.s. 153A of the Act - addition to capital gain - Held that:- Assessing Officer was holding the jurisdiction of the person searched under section 132 of the Act, from whose possession certain documents relating to the assessee were found. The said officer also held the jurisdiction of the present assessee before us and the satisfaction in such circumstances can be said to have been exercised by the Assessing Officer before initiating the proceedings under section 153C of the Act. No merit in the plea of the assessee that the document found in the present case being 7/12 extracts, landholding of the assessee, being a public document, cannot be said to be a document on the basis of which, the proceedings under section 153C of the Act could be initiated. - Decided against assessee.
Addition of family income in the hands of assessee - Held that:- Once the property is being held by the assessee and their family members from year to year jointly, we find no merit in the order of the Assessing Officer, in this regard. The assessee at best could be taxed for the income arising in his hands only of his share in the property and not on account of income arising on account of share of his family members in the property, even though the 7/12 records the name of assessee. The assessee had already declared his share of income from capital gains in assessment year 2002-03. However, the gain arising from the sale of the property is now being taxed in the hands of the assessee in assessment year 2001-02 holding the assessee to be the owner of the whole property. However, we find no merit in the said stand taken by the authorities below, especially in view of the facts and circumstances pointed here-in-above. Accordingly, we direct the Assessing Officer to tax the share of the assessee in the said property in his hands and the balance share of the property is to be taxed in the hands of the other family members who are joint owners of the property. The CIT(A) has vide para 6 of the appellate order held the assessee to be entitled to the deduction under section 54F of the Act in respect of one flat owned by the assessee, against which the Revenue is not in appeal. Accordingly, we direct the Assessing Officer to re-compute the income of the assessee under the head capital gain in the hands of the assessee vis-à-vis his share in the property after allowing the benefit of deduction under section 54F of the Act. - Decided in favour of assesse.
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